A Brief Note On Union And Wage Inequality - 1527 Words

Yuan Mingda 1000073127 Eco344 Union and Wage Inequality In the economic literature, there are several macroeconomic studies relating the increase in wage inequality among US male workers to a decline of unionization in the private sector. For example, a paper by Card, Lemieux and Riddell (2004) supports such an opinion with their empirical analysis on the influence of unions on the wage structures of Canada, the US, and the UK. According to the arguments presented in this paper (and other papers that hold the same opinion) and some basic ideas surrounding how unions work that I learn on the course, the supporting evidences are two-fold; one is within-sector impact and between-sector impact, and the other is union’s impact on non-union†¦show more content†¦As the name suggests, within-sector impacts are the unionization impacts within a particular firm or industry, depending on the level where union bargaining takes place. To be more precise, it arises because wage distribution is different in the union and non-union firm o r industry. Typically in Canada and the US the firm level is more common while in many European countries the industry or occupation level is more widespread. Therefore, I will focus on firm-level wage distribution here when discussing union’s within-sector impacts. As taught in the lecture, unions are collective organizations whose primary objective is to improve worker outcomes through collective bargaining with employers over labour contracts, the â€Å"outcomes† usually meaning higher wages and more employment. In firms where discrimination against minority or less-educated are rampant, union’s impacts are especially evident. Without unions, a worker’s wage is typically based on manager’s judgment on his/her performance, which can be easily biased by the manager’s attitudes towards the worker’s education, ethnicity, gender and etc. Under such circumstances, workers such as blue collars and high school graduates can be easily discriminated, and may be paid lower wages even if they do the same amount of work as others. However, with the help of union, and collective bargaining it brings, those disadvantaged workers gain more leverage when negotiating with their employers on the salary. As